Sunday, November 16, 2008

Banco Sabadell is considering selling approximately 50% of their branch offices. The entity is planning to sell 600 offices in its network under the sale and leaseback model, a transaction that provides investors with great security and a potential payoff of between 500 and 600 million Euros.

According to data from the Spanish newspaper Expansión, Banco Sabadell has confirmed that the transaction of the sale of up to 600 branches currently owned by the bank is in its initial phase, and would not take place until 2009. The transaction would involve the sale of blocks or parts of these assets, under the sale and leaseback model, with Sabadell remaining as a tenant for a period of between 25 and 30 years, with a final option of buying the property back, thus guaranteeing safe and steady income for the buyer. This type of transaction offers great security to investors since it is backed by an entity with a good rating. Market experts have said that the entity could earn between 500 and 600 million Euros.

According to preliminary plans, the corporate offices would not be included in the transaction although sources close to the entity note that they have also been appraised. Banco Sabadell began appraising their real estate assets a year ago and confirms that they are in no hurry to sell and intend to wait for an interesting opportunity to present itself. In fact, the bank has strengthened its balance sheet this year by selling half of its bank insurance business to Zurich, with a capital gain of 512 million Euros.

Banco Sabadell will thus join Spanish financial institutions that have decided to sell off part of their real estate holdings, a trend Banco Santander started with BBVA, Banco Popular and Caixa Galicia following suit.
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